Indian exporters weigh impact as transportation costs skyrocket

India’s exports and imports haven’t been significantly impacted from the Red Sea crisis so far. However, with government official noting increased transportation costs due to longer shipping routes, concerns are arising over the potential impact on India’s exports, particularly with the EU and the US, which collectively contribute over 30% to the country’s total exports.

The ongoing disruption, fueled by Houthi rebel attacks, has led to rising freight costs, mandatory war risk insurance, and significant delays in global supply chains.

Basmati rice exporters, for example, now contend with a 233% increase in freight costs.

The Red Sea, vital for 30% of global container traffic, has witnessed heightened tensions, prompting shipping firms to circumvent the Bab al-Mandab straits for trade with Europe, opting for the longer Cape of Good Hope route.

This shift increases voyage distances by 40%, elevating transportation time and cost. As India grapples with the repercussions, exporters are compelled to diversify trade routes to mitigate the impact of disruptions in the critical Red Sea shipping route.

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